Docs Still Shifting Away From Private Practice, Survey Finds

Physicians continue to shift away from private practice, according to the latest data from the American Medical Association’s biennial report on the physician workforce.

The share of doctors who worked in practices wholly owned by physicians fell from 60.1% to 46.7% from 2012 to 2022, according to the Physician Practice Benchmark Survey.

“Importantly, those percentages include physicians who have an ownership share in the practice as well as those who are employed in the practice (typically younger physicians) or contract with the practice,” Carol Kane, PhD, AMA director of economic & health policy research, wrote in the report.

In contrast, the share of doctors who were directly employed by or contracted directly with a hospital climbed from 5.6% to 9.6% during that time, while the share of doctors who worked in a hospital-owned practice also increased from 23.4% to 31.3%.

Looking at different specialties, the percentage of physicians in private practice was similar, ranging from 41.2% among general surgeons to 49.7% among radiologists. Outliers were emergency medicine doctors and surgical subspecialists, with 37% and 63.3%, respectively, in private practice.

“The data show that by far, the most cited reason for hospital and health system acquisition had to do with payment,” Kane wrote. Some 80% of physicians indicated that the need to better negotiate favorable rates with payers was a “very important” or “important” reason as to why their practice was sold to or acquired by a hospital or health system. They also pointed to a need to better manage payers’ regulatory and administrative requirements, as well as a need to improve access to costly resources, with each reason flagged by about 70% of physicians.

“The AMA analysis shows that the shift away from independent practices is emblematic of the fiscal uncertainty and economic stress many physicians face due to statutory payment cuts in Medicare, rising practice costs, and intrusive administrative burdens,” AMA President Jesse Ehrenfeld, MD, MPH, said in an accompanying statement. “Practice viability requires fiscal stability, and the AMA’s Recovery Plan for America’s Physicians is explicit in calling for reform to our Medicare payment system that has failed to keep up with the costs of running a medical practice.”

The current analysis also noted a “redistribution of physicians from small to large practices.” For instance, in 2012, 61.4% of doctors worked in practices comprised of 10 or fewer physicians, but by 2022, 51.8% of doctors worked in those smaller practices.

Meanwhile, the share of doctors in practices with at least 50 physicians grew from 12.2% to 18.3%. Shares of doctors in mid-sized practices remained relatively stable.

The AMA analysis looked at changes in employment status among physicians. In 2012, 41.8% of physicians were employees and 53.2% were owners. In 2022, 49.7% of physicians were employees, 44% were owners, and 6.4% were independent contractors. “The ownership share dropped 9 percentage points over this period,” Kane stated.

Additionally in 2022, women physicians were less likely to be owners than their male counterparts (35.7% vs 48.6%) and more likely to be employees (56.9% vs 45.6%).

Kane noted in the analysis that there was a suggestion that “a smaller percentage of each successive class of physicians has started their post-residency career in an ownership position.” In 2012, 44.3% of physicians under age 45 were owners versus 31.7% by 2022.

Differences in the employment status of young physicians and older physicians, of whom 51.3% were owners in 2022, indicate that “when physicians retire, those who are owners are not replaced in the workforce on a one-to-one basis,” Kane added.

The changes for one cohort of physicians — those born from 1958 to 1967 — “help round out the understanding of the changes in ownership share,” according to the analysis. In 2012, when these doctors were ages 45-54, 53.9% were owners. In 2022, 49.7% of those ages 55-64 were owners. “It is notable and perhaps surprising how small the drop is within this cohort — only 4 percentage points — compared to the drop of 9 percentage points among all physicians,” Kane wrote.

“Thus, it appears that the marked drop in the percentage of physicians who are owners over the last decade was not due to established physicians becoming employees in droves, but rather to new physicians making different decisions than older physicians, and to successive generations of physicians increasingly choosing employment rather than ownership after residency,” she added.

The analysis is one of many recent reports on the shifting tides of physician ownership. For instance, private equity acquisitions of U.S. physician practices have risen dramatically over the last decade, driving up consumer prices in the process, according to a new report from the American Antitrust Institute and other groups.

MedPage Today has also detailed the various factors behind the continued decline of private practice.